‘Tis the season for giving back! Alberta leads the way in generosity, and with Dec. 31 marking the last day of the tax year, it’s the perfect time to make sure your charitable donations go further — for you and the causes you care about. Here are some tips to help maximize your impact:
Make your donations claims count
Did you know? In Alberta, you get 60% back in tax savings for all donations under $200. If your total donations are larger, your personal tax accountant should carry forward the donation to a future year. That is, if you are someone who doesn’t make donations every year. If you do, it’s more useful to use all your dividends each year. And remember, you’ll need an official tax receipt to make a claim.
Donate personally, not through the corporation
Generally, it is more beneficial to donate personally. It often makes things simpler, and it can help build your personal credit score too.
Choose registered charities
To claim your tax benefit, make sure you’re donating to registered Canadian charities. You can check the CRA’s online registry of charities if you’re unsure about an organization.
Consider shares or life insurance
Donating appreciated public company shares can offer you a double benefit: no capital gains tax plus a tax receipt for the full market value. It’s a smart way to give if you’re holding investments with a gain.
Note for people who just sold their business or had a windfall, there are new rules changes around alternate minimum tax, which can make large donations less tax-effective. Talk to your accountant before making large donations.
Extra tips to make the most of your giving:
Check for employer matching programs
Some workplaces match employee donations, doubling your impact! It’s worth asking if your employer has this option – a quick check could mean twice the support for the causes you care about.
Consider a donor-advised fund (DAF)
If you’re thinking of making a larger donation but want to spread it out over time, a donor-advised fund could be perfect for you. You can maximize tax savings now and decide which charities to support later – a smart, flexible way to give back over the years.
Combine family donations for greater impact
Pooling donations with family members can really add up. By claiming them together, you’re more likely to hit the $200 mark that qualifies for Alberta’s higher 50% tax credit. A small change that makes a big difference.
Look into in-kind donations of appreciated assets
Donating appreciated property, like stocks, real estate, or art, can be a very tax-friendly way to give. You’ll avoid capital gains taxes and still get a full-value tax receipt. A chat with a tax advisor can help you make the most of these options.
Maximize benefits from RRSP or RRIF assets
If retirement’s on the horizon, consider donating part of your RRSP or RRIF assets now or as part of your estate plan. It’s a meaningful way to give and can reduce taxes on assets that would otherwise be fully taxed in the future.
Plan for legacy giving
Looking to leave a lasting impact? Legacy gifts, such as a bequest in your will or donating a life insurance policy, offer additional tax benefits while supporting a cause close to your heart for years to come.
Know what NOT to donate for a tax receipt
Unfortunately, donations of services, personal property without an appraisal or household items like mattresses or hazardous materials won’t qualify. Charities do accept gently used items like food, books, clothes and sports equipment — while these won’t give you a tax receipt, they’ll definitely be appreciated!
Avoid donation scams
Be cautious of any schemes that promise inflated tax receipts. Stick to fair market value, and always do a quick search to confirm a charity’s credibility.
We hope you find these tips helpful in making your generosity go further. If you have questions about tax-saving strategies or want simple, stress-free bookkeeping, contact us.
Read more about Personal Tax topics that may be helpful to you and your small business.
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